The Bad Side of Too Much Leverage.

[That One Guy 10]

Some of you may have seen this before, but I decided to post it. He re-posted it on his blog, so it caught my interest. He said, he didn't want to be in the position, but he couldn't accept a small loss. You hear of people blowing out there accounts in a a few months. This guy blew out his in a weekend.

 

http://highprobability.blogspot.com/2008/07/stock-market-ruined-my-life.html

 

This is just a realization, for a young trader like me, for the potential demons to come.

[smwinc 20]

The best comparison I can think of to trading is that it's similar to driving a car.

 

It is completely irrelevant if you have been driving safely for the past 10 years - it only takes one split second of deciding to look away while you are driving, and your entire life is completely ruined.

 

One loose trade. One trade you decide to just "hold". One trade you have "conviction on". That is all it takes.

[That One Guy 10]

The best comparison I can think of to trading is that it's similar to driving a car.

 

It is completely irrelevant if you have been driving safely for the past 10 years - it only takes one split second of deciding to look away while you are driving, and your entire life is completely ruined.

 

One loose trade. One trade you decide to just "hold". One trade you have "conviction on". That is all it takes.

 

My father has been a butcher for over 30 years now. He experienced this phenomenon. 23 years in the business and while cutting on the saw, he looked away and complacently chatted with the customer. Before you know it, he sawed his index finger off. 23 years is a long damn time in one specific area. I, consider him an expert, but it shows you the realization, in which you never know. Life is full of probabilities and you just have to accept the fact, that anything can happen at any time.

[Guest forsearch]

My father has been a butcher for over 30 years now. He experienced this phenomenon. 23 years in the business and while cutting on the saw, he looked away and complacently chatted with the customer. Before you know it, he sawed his index finger off. .

 

His name wasn't Abdullah, was it?

 

[brownsfan019 17]

Someone is on a youtube video kick...

[Guest forsearch]

Occasionally, google video will do as well.

[BlowFish 10]

Imho one of the key metrics you can know about your trading is the risk of ruin. To really trade without irrational fear in its many manifestations you need to know and accept your RoR.

 

http://www.traderscalm.com/ror0.html

 

Is a great little site that deals with RoR and how trading within a comfortable zone can lead to trading calm.

[mister ed 10]

Alternative titles for this thread:

 

The bad side of holding positions over the weekend

The bad side of holding long equity futures positions over the weekend

The bad side of holding long equity futures positions over a long weekend

The bad side of not accepting a small loss initially

[james_gsx 16]

There is one thing I see new traders do consistently, and it doesn't matter who it is or what they trade, I see it ALL THE TIME.

 

1 - They get comfortable

2 - They start taking bigger and bigger positions

3 - They defend their large sizes by coming up with "risk management"

4 - They take a loss that should be small under normal conditions, and it ruins their month/year/account

 

I see it so often, I wish I could start a brokerage that gave out fat discounts like free trading period. That way, I could design a system that monitored trades and found when traders enter this stage. At that point, my system would automatically take the opposite side of every trade.

 

Unfortunately, I never see a trader admit or listen to me when I tell them they are doing the above. But after the fact, they see it, unfortunately. I've noticed people want to learn and see it for themselves rather than listen to advice, precisely why most men suck with women too